Latest news with #DuBuisson
The Citizen
12-06-2025
- Business
- The Citizen
BEE is bringing South Africa's economy to its knees
BEE is bringing South Africa's economy to its knees – new report A report released on June 12 by the Solidarity Research Institute (SRI) and the Free Market Foundation (FMF) has sent shockwaves through South Africa's political and economic landscape. The report delivers a scathing critique of the country's Broad-Based Black Economic Empowerment (BEE) policy, asserting that it is causing substantial damage to the South African economy while enriching only a small, politically connected elite. BEE was initially introduced as a transformative policy aimed at redressing the economic imbalances of apartheid by promoting greater inclusion of black South Africans in the economy. However, the latest findings paint a different picture, highlighting a policy that is now burdening economic growth, exacerbating inequality, and stalling job creation. According to the report, the annual compliance costs for BEE range from R145-billion to R290-billion, which represents between 2% and 4% of South Africa's Gross Domestic Product (GDP). This enormous economic burden has resulted in an annual reduction of GDP growth by between 1.5% and 3%, with a concomitant loss of between 96 000 and 192 000 jobs each year. Over the years, this has accumulated to about 3.8 million lost job opportunities for South Africans. 'This huge economic cost is not simply the result of negligence or the mere poor implementation of a plan. It is a deliberate government policy that causes it,' said Theuns du Buisson, economic researcher at the SRI and co-author of the report. 'It is irrelevant when someone then says the policy was introduced with good intentions. Today it serves as a mechanism to enrich the elite at the expense of our country's economy and especially at the expense of its poorest citizens.' The report further outlines that while there has been some progress in terms of black ownership and skills development, these gains are heavily overshadowed by the adverse effects of BEE. Among these are increased inequality, elite capture of policy benefits, and widespread economic stagnation. 'The policy places a particularly heavy burden on critical sectors such as mining and finance,' the report reads, 'and it deters foreign investment, encourages capital flight, and stifles technological progress.' South Africa's economic position on the global stage has deteriorated markedly, falling behind other middle-income countries with which it was once comparable. The report critiques the lack of focus and effectiveness in the implementation of BEE policies, which contrasts with more successful affirmative action or empowerment programmes abroad. Du Buisson pointed to countries such as Brazil and the United States, which have begun to phase out similar race-based economic policies. 'Moreover, in other countries, affirmative action policies are precisely there to prevent discrimination, while in South Africa, they in fact make discrimination compulsory,' he noted. 'South Africa must now follow the path of other countries and get rid of it. BEE has become an instrument that benefits a small, politically connected elite and has long ago stopped being a policy that could empower a disadvantaged society.' Connie Mulder, head of the SRI, emphasised the urgency of the situation: 'South Africa cannot afford to continue down this path. The data is clear. BEE, in its current form, is damaging the economy and hurting those it was meant to help. We need policies that promote real economic participation and growth without racial quotas that cripple progress.' The call to action from the writers of the report is for policymakers to immediately abolish the current BEE framework and replace it with a policy that fosters inclusive growth without impeding the economy. 'We need an economic environment where all South Africans, regardless of race, have the opportunity to contribute and prosper,' Du Buisson said. – Access the full report here: Do you have more information about the story? Please send us an email to bennittb@ or phone us on 083 625 4114. For free breaking and community news, visit Rekord's websites: Rekord East For more news and interesting articles, like Rekord on Facebook, follow us on Twitter or Instagram or TikTok. At Caxton, we employ humans to generate daily fresh news, not AI intervention. Happy reading! Stay in the know. Download the Caxton Local News Network App Stay in the know. Download the Caxton Local News Network App here
IOL News
22-05-2025
- Business
- IOL News
Navigating South Africa's Budget 2025: key decisions in a stagnant economy
Explore the challenges and decisions facing South Africa's Budget 2025 as economists debate the implications of fiscal policies amidst a stagnant economy. Image: GCIS South Africa's economic outlook remains bleak, with National Treasury forecasting real GDP growth of just 1.7% over the Medium-Term Expenditure Framework (MTEF) period. Persistent structural constraints, weak investment confidence, and ongoing energy and logistics challenges continue to limit growth, raising serious concerns about fiscal stability. Finance Minister Enoch Godongwana has finally delivered South Africa's 2025 Budget Speech, following two prior setbacks that delayed the announcement. One attempt was blocked by legal action, while the second was derailed by coalition disputes over the now-withdrawn VAT increase proposal. The speech, originally scheduled for earlier this year, faced significant political and legal hurdles as government leaders struggled to find common ground on fiscal policy. Speaking after the tabling of the Budget, Anchor Capital economist Casey Sprake highlighted that the Treasury has had to revise revenue projections downward due to the scrapped VAT rate hike, which was abandoned for political reasons. To compensate, fiscal drag has been applied, meaning personal income tax (PIT) brackets have not been adjusted for inflation. This alone is expected to generate R49.4 billion over the next three years. Additionally, higher excise duties on alcohol and tobacco and a freeze on inflation adjustments to medical tax credits will add R5.8 billion in revenue. In place of the VAT hike, the Treasury has opted for inflation-linked increases to the general fuel levy, a decision seen as less politically contentious, as it spreads the tax burden more broadly. However, not all economists believe the government is making sound fiscal decisions. Theuns du Buisson, an economic researcher at the Solidarity Research Institute (SRI), describes the Budget as a continuation of poor economic policy, predicting ongoing economic stagnation. According to Du Buisson, Finance Minister Enoch Godongwana's approach to redistribution and structural transformation is misguided. 'This is, as always, a poor budget. Simply dividing a shrinking economy by taxing the rich—and, according to the minister, spending 60 cents of every rand on social relief—is not sustainable. It is certainly not something to be proud of,' says Du Buisson. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ He further argues that the income tax threshold unfairly classifies middle-class earners as wealthy. 'People earning just R7,979 per month are classified as 'rich' under this budget, as this is the point at which someone starts paying income tax.' Du Buisson also believes that the absence of a VAT increase is being wrongly framed as a revenue loss, rather than acknowledging the core issue: government spending is rising faster than economic growth. 'The overall tax rate is 25.2% of GDP. The minister needs an extra 1% of GDP to balance the budget. The simple solution? Grow the economy by 4%, and the shortfall disappears,' he argues. While the minister speaks of limited economic growth, Du Buisson contends that government policies are actively restricting growth potential. 'Personal income tax brackets have once again not been adjusted for inflation, shrinking disposable income. On top of that, fuel levies are increasing for the first time in three years, affecting nearly every cost in the economy. How can growth happen without affordable energy and adequate consumer spending?' he asks. Despite concerns around taxation and spending, there is some optimism about private sector involvement in infrastructure development. Solidarity notes that there is increasing space for business-led investment in transport infrastructure, which could help offset logistical inefficiencies that have contributed to the economy's sluggish performance. Meanwhile, UASA, a major trade union, has raised concerns about future tax burdens. 'The minister has noted that the 2026 budget will need to introduce new tax measures to raise R20 billion, which could further squeeze consumers and taxpayers," says Abigail Moyo, UASA spokesperson. Moreover, without a concrete plan for job creation, businesses will struggle to invest, limiting economic expansion and structural reform efforts. Outside of necessary spending allocations for health, education, state-owned enterprises (SOEs), security, and social relief, the Budget fails to offer any meaningful solutions beyond what has been presented in previous years, she says. `PERSONAL FINANCE
